Major Home Renovation

Major Home Renovation

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Is a Major Home Renovation Worth It in the Long Run?

Let’s look at this example.

Let’s say you have a 4-bedroom colonial style home in a great school district. The neighborhood is amazing, and you are very comfortable there, but your kids are all grown up and the original benefits of the home no longer apply.

You’ve always wanted a huge master suite and are considering merging 3 of the smaller bedrooms on the second floor to achieve this dream.

In the short term, you are over the moon excited about your newly renovated oasis.

In the long term, when you go to sell your home down the road, you’ve now taken a 4-bedroom home in a great school district and turned it into a 2-bedroom home. Your pool of potential buyers has shrunk significantly and so has the value of your home (unless you are able to find someone who has the exact needs you have today!).

Why not consider listing your 4-bedroom home now and moving into a gorgeous 2-bedroom with a master suite? Your house can become a home for the next family looking for that perfect neighborhood with a great school district to raise their kids in!

You may even be able to achieve your dream in the same area you love, without having to give up your favorite restaurants and grocery stores.

Bottom Line

If you are debating a major renovation that would change the layout of your home, before you pick up that sledgehammer, let’s get together and discuss the available listings in our area that might meet your needs today!

Kristin Fullana, experienced realtor with Choice One Real Estate located in Cutler Bay, Florida. For questions about this article or about the current local real estate market you can contact Kristin at 786-390-2869 or email direct at mk@choiceone.us

Kristin Fullana

Kristin Fullana

Realtor since 2006

Cell: 786-390-2869

Email: mk@choiceone.us

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The Cost of Waiting: The Impact of Interest Rates Increasing

The Cost of Waiting: The Impact of Interest Rates Increasing

Some Highlights

  • Interest rates are projected to increase steadily heading into 2019.

  • The higher your interest rate, the more money you end up paying for your home and the higher your monthly payment will be.

  • Rates are still low right now. Don’t wait until rates hit 5% to start searching for your dream home!

 

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6 Homeowner Tax Mistakes Accountants Say to Watch For

6 Homeowner Tax Mistakes Accountants Say to Watch For

Get every deduction you’re entitled to without the fear of making mistakes that’ll bring the tax man to your door.

Hooray — it’s tax time! OK, few people get quite that excited about filling out government forms, but there’s good reason to appreciate the annual ritual. Tax deductions are a serious perk for homeowners, and they can be a major boon to your family’s finances.

But unless you’re a CPA, it can be easy to miss these deductions, or worse: raise a red flag with the IRS because you got deduction happy. Here are the top six homeowner tax blunders accountants see the most.

1.  Missing the Mortgage Interest Deduction

Itemized deductions can be a great way to lower your tax bill. But homeowners, particularly newbies, may be used to claiming the standard deduction because they haven’t had enough of the expenditures that qualify them for itemized filing.

You can deduct the interest portion of your mortgage payments. That might mean your itemized deductions will now exceed the standard, saving you tax dollars.

The savings are at their maximum early on, when most of your mortgage payments go to interest, not principal. Over the years, the balance shifts, and for some it might seem that they lose the itemized advantage. But there’s a way to keep the savings maximized.

The trick is to use an alternating approach to filing, according to Chris Hardy, a certified financial planner with Paramount Investor Advisors in Suwanee, Ga. One year you maximize every deduction you can, including MID, and prepay whatever you can for the next year, such as property taxes and charitable contributions. The next year, you take the standard deduction. Overall, says Hardy, you may end up saving more money.

2.  Assuming Everything House-Related is Deductible

Deductions are great, but you can’t write everything off on your taxes. And to stay in the good graces of the IRS, you don’t want to over-deduct.

Talk to your accountant or tax preparer to be straight on allowable deductions, which, for a homeowner, generally means mortgage interest and real estate taxes. You may also deduct points charged on the mortgage in the year you purchased the home.

Related: How — and When — to Deduct Mortgage Points

“A lot of people will try to take homeowners association fees or condo association fees as deductions even though it’s not an allowable deduction,” Hardy says. “I see them try to deduct keeping up the yard as an expense.”

Although claiming unallowable deductions might not immediately flag you for an audit, according to Hardy, if you do get audited for something else, the IRS will look to see what else it can find. The result could then be back taxes, interest, and penalties. And the IRS will likely check as many back years as it legally can.

3.  Neglecting Your Home Office

Many people fail to take the home office deduction for fear of being audited, or because it’s just plain hard to calculate if you don’t use the newer, simplified method. (More on that math-saving gem later.) However you compute this deduction, it’s a great way to save some cash.

To qualify for the deduction, your office space must be used regularly and only for business. If you work for someone else, says Hardy, there has to be documentation — it could be an email from a supervisor — that your work at home is required as part of the job and is for the employer’s convenience. In addition, employees can’t take the deduction if they rent any part of their home to their employers and use the rented portion to perform work for the employer.

If your use is legitimate, you can deduct a proportionate amount of a number of expenses, including insurance, repairs, utilities, services, and depreciation, which can really add up. Or you can use the uber-simple method of multiplying the square footage of the office by $5 for your total deduction. Check IRS Publication 587 for details.

And, better yet, if the home office is your base of business, you may get additional deductions from your business income, such as mileage for driving to and from your clients’ locations because now it’s considered a business expense rather than commuting.

Related: 12 Tough Questions (and Answers) About Home Office Deductions

4.  Understanding Rental Income

Renting out a room or wing of your house on Airbnb can be a fun way to meet new people and make extra income. It can also have several important tax implications.

When renting out a room in your personal residence, says Greg Freyman, managing partner with Freyman CPA in New York City and Westwood, N.J., the amount of mortgage interest and real estate taxes you can claim as itemized deductions changes. You can only deduct MID and real estate taxes for the portion of the house that isn’t rented. So, if you have a 2,000-square-foot house and rent out a room of 100 square feet, you can deduct 95% of the mortgage interest and taxes on Schedule A.

However, because the rented space is now converted to investment property, you can also take deductions on your rental expenses. Some examples are the rental area’s portion of overall maintenance and utilities, again calculated by the percentage of overall square footage.

But (there’s always a but when it comes to taxes) you can only claim those rental expenses for the time period you rented the space, says Honolulu-based Crystal Stranger, president of 1st Tax Inc. and an enrolled agent who can represent taxpayers before the IRS. If you rented that 100-square-foot room mentioned above, which is 5% of the total space, for a total of six months, you’d take 5% of the maintenance and utilities, divide them by half, and then deduct that amount on Schedule E.

5.  Paying a Relative’s Mortgage

Good on you for helping someone in need by covering their mortgage payment, but be a smart philanthropist. No one will get any deductions for those payments if you directly pay the lender, Freyman says, unless you’re listed on the deed.

To increase the chances that someone snags the deduction, make a gift of the money to your parent or other beneficiary and let her be the one to pay the bills — although you won’t get any tax benefit unless you can claim her as a dependent. Treating a relative who doesn’t live with you as a dependent means meeting certain requirements. For instance, you need to have a certain type of relationship with the person and the relative must pass a gross income test.

Also, remember that there’s a limit on the amount of money you can give someone in a year — $14,000 — without incurring a gift tax. If you exceed the annual total, you may have to pay the tax.

6.  Never Challenging Property Tax Bills

For many, local property tax is a big chunk of their paycheck, and sometimes that chunk is bigger than it needs to be. “Values go up and down over time,” says REALTOR® and Atlanta attorney Bruce Ailion. “The assessor reassesses areas of town in bulk from time to time. Often these bulk reassessments result in a valuation 10%, 20%, even 50% more than a home’s value.”

Reassessments happen at different times, depending on location, and local and state laws will govern what you must do. Typically, you have fewer than 30 days to challenge the assessment, and, in a large metropolitan area, the process could take as long as a year.

You’ll want to start by checking the assessment data — size of the lot, number of rooms, bathrooms, etc. — to be sure that the facts are correct. If not, the appeals process may be easy.

You can also check to see if the assessment seems reasonable. Work with your real estate pro to get market data, such as info on comparable properties — known as “comps.” Then look at local tax records to see if the value of your property seems overly high in comparison to like properties. You could even hire an independent appraiser, although that can run $350 to $600, undercutting the savings you might ultimately receive.

You then appeal the property tax bill first to the assessor’s office. If the result is unsatisfactory, you may be able to appeal to a local board or possibly to a court. The odds are good enough that appealing usually makes sense. “I’ve done about 150 appeals and never had an increase,” Ailion says. “The worst case is the value stays the same.”

 

 

By: Erik Sherman © Copyright 2015 NATIONAL ASSOCIATION OF REALTORS®

5 Holiday Hosting Disasters and How to Avoid Them

5 Holiday Hosting Disasters and How to Avoid Them

Take a look at the most common things that can go wrong when you have guests and learn how to prevent them.

Imagine you’re preparing to host your annual holiday party, and you’re past the point of no return. The veggies and meats have been bought. Guests are already braving busy airports and crowded highways to get to your home — and then your oven won’t turn on. Your home-cooked meal has quickly turned into a microwave dinner.

That’s just one of many hosting nightmares that can end your holiday party before it even begins. Thankfully, some of the most damaging mishaps easily can be avoided. We collected five of the most prevalent issues and give you preventative tips to keep your holiday party on track.

Problem: The oven doesn’t heat

For any holiday occasion, the oven is the most important appliance in your house. If it fails to work, the centerpiece of your meal could go from roasted beef, ham, duck, or Tofurky to Peking Duck from the local Chinese takeout joint.

How to avoid:

  • There are any number of reasons a stove can break, but one common cause of disaster is easy to prevent. Don’t self-clean your oven until AFTER the holidays. You risk blowing a fuse or a thermostat, and tracking down an oven technician around the holidays can be tough.

Problem: The kitchen sink clogs

The day after Thanksgiving is the busiest of the year for plumbers. The prime cause of this clog-a-thon is the mistreatment of drains when cooking holiday feasts. We hope your Thanksgiving went well, and that you avoid clog-a-thons for the rest of the holidays.

How to avoid:

  • Fats and cooking oils can solidify in your pipes, so never dispose of them in your kitchen sink.
  • If you have a garbage disposal, make sure it’s running before anything goes in it, and never feed it any stringy, fibrous, or starchy foods like poultry skins or potato peels.
  • To fix, don’t rely on chemical drain-clearing products that can harm your pipes. Use a snake instead, available for $15 at your local hardware store. Best to keep one on hand.

Problem: The toilet stops up

Toilets have a way of clogging up at the worst times, such as during parties and when you have overnight guests. This is especially true if you have a low-flow toilet from the early 1990s.

How to avoid:

  • Don’t flush anything other than sewage and toilet paper down the toilet. And there’s nothing wrong with putting up a polite note to remind your guests to do the same.

Problem: The fridge doesn’t cool

Without a properly functioning refrigerator, your meat could get contaminated, your dairy-based treats could go sour, and you may not be able to save your yummy leftovers. To avoid discovering a warm fridge after it’s too late, take these simple precautions.

How to avoid:

  • Get a thermometer for your refrigerator to make sure each shelf stays below 40 degrees and you can be aware of any temperature changes.
  • Also make sure the condenser coils located on the back of the unit or beneath it are free to breathe. Coils blocked from circulating air by cereal boxes atop the fridge, or dirtied by dust or pet hair can prevent a fridge from keeping cool.

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© Copyright 2015 NATIONAL ASSOCIATION OF REALTORS®

Thanksgiving Cleaning in Half the Time

Thanksgiving Cleaning in Half the Time

Published: November 1, 2012

The Pilgrims were on to something when they planned a Thanksgiving potluck; here are other good ideas that’ll simplify your T-Day kitchen cleanup.

Want something to be thankful for? Check out these tips that’ll make your Thanksgiving kitchen cleanup faster and easier — and will give you more time to enjoy family and friends.

Plan a potluck: The first Thanksgiving was a potluck; so let your guests share the fun and bring dishes to share. Then make sure they take home their serving bowls and platters, which will cut down on dishes to wash and put away.

Decide on disposable: Leave Mom’s good dishes in the breakfront and set your table with disposable — and recyclable — place settings. Party stores sell plastic dishware that look like real china (12 dinner plates for about $13). After eating, collect and toss. If you can’t stand to set a table with anything but your best, use disposables for hors d’oeuvres and dessert.

Triple-duty cookware: Cut down on cleanup by selecting cookware that can go from oven to table to freezer. Or, serve food in edible containers, such as bread bowls or hollowed-out winter squash, which you can either consume or compost.

Empty fridge: Start your holiday with a clean slate, which will make the inevitable mess less daunting than piling clutter onto clutter. Before beginning Thanksgiving prep, pick up depressing home clutter and clean out your fridge to make room for ingredients and leftovers.

If possible, designate a shelf for Thanksgiving food, which should be empty when you start your meal, then filled with leftovers when you’re finished. In a week, clean out that shelf again. Make soup from leftover meat and veggies, and then freeze. Compost wilted greens. Toss old dairy products.

Prepare roasting pans: You won’t have to clean what you don’t get dirty. So line your turkey roasting pans with heavy-duty aluminum foil, or cook the bird in a bag. Pour drippings into a pot to make gravy, then throw away the liner.

Line garbage cans: Double- or triple-line garbage cans, which saves time when the cleaning campaign begins. After you toss a trash bag, there’s another waiting for action.

Soaking bin: Soak pots and pans as soon as you transfer food to platters. But instead of filling the sink with soaking pots, designate a small trashcan as the soaking spot. Fill it will soapy water and dirty pots, and hide it under a sink or in a mudroom. That way, your sink is free throughout the evening to clean as you go and rinse dishes on the way to thedishwasher.

Stop stains: Don’t let stains on carpet or rings on furniture set. While wine stains are still wet, dab with go-to cleaner hydrogen peroxide mixed with a few drops of dish detergent; blot with a clean cloth. Get rid of water stains on wood furniture with a dab of white toothpaste (not gel). Rub in the direction of the grain.

Pump up the music: Up-tempo music will give you a second wind for cleaning. So turn off the soothing dinner tunes and get rocking with our cleaning playlist.

 

By: Lisa Kaplan Gordon:© Copyright 2015 NATIONAL ASSOCIATION OF REALTORS®

Does Landscaping Give a Good Return on Investment?

Does Landscaping Give a Good Return on Investment?

Published: November 8, 2012

Boost Your Roost contest points up what an appraisal is and isn’t and the fact that home value is more than financial.

At the end of episode 5 of our Boost Your Roost series, we’ll reveal the post-landscaping appraisal and value add for the contest winners’ backyard makeover, which included installing a door, pouring a concrete patio, and adding plants.

If you landscape your yard, will you get the same ROI as the Smiths did?

Nope. You might appraise higher. Or lower. Appraisals are hyper-local: An appraisal in Santa Maria, Calif., where the Smiths live, has nothing to do with the outcome of an appraisal in MacLean, Va., or even nearby San Luis Obispo, Calif.

Appraisers give their best opinion of value based on how a home’s features stack up against those of similar homes recently sold nearby. In addition, appraisal values shift with market changes. A home appraised at $150,000 today might appraise higher or lower two months from now.

So is a landscape makeover worthwhile? You bet!

Like any home improvement, it enhances qualify of life. “Having a usable yard is huge” especially for Aaron, who uses a wheelchair, says Sandy MacCuish, who appraised the Smiths’ home before and after the makeover. “The Smiths can now use the entire backyard, and it’s accessible from the dining room. The traffic flow is good, and the door brings in more light than the window did.”

And when it comes time to sell, landscaping is the first thing people will notice. In fact, many people make up their minds about a property within the first few seconds.

But don’t do a landscaping project just to flip a house. You won’t get your money back, MacCuish notes. In that case, you’re better off redoing a dated kitchen or bath, he says.

Other exterior projects — yea curb appeal! — that typically offer a good ROI, according to “Remodeling” magazine’s annual “Cost vs. Value Report,” are:

  • Exterior door replacements. On average nationally, a steel entry door replacement recouped 101.8% of its cost in the 2015 survey.
  • Midrange garage door replacements recoup 88.4% of the cost.
  • Wood deck additions recoup more than 80%.

 

By: Christina Hoffmann © Copyright 2015 NATIONAL ASSOCIATION OF REALTORS®

 

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